Samsung Electronics Co. 8GB Double-Knowledge-Fee (DDR) 4 reminiscence modules.
SeongJoon Cho | Bloomberg | Getty Photos
The U.S.-China chip battle might influence South Korea’s chip giants as China accounts for a big chunk of their manufacturing capability — however there should not be long-term disruptions, based on Fitch Scores.
Samsung Electronics and SK Hynix face dangers because the U.S. seeks to dam China’s entry to superior semiconductor chip gear, based on the June 7 report.
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China accounts for 40% of Samsung’s whole flash reminiscence chips (NAND) manufacturing functionality, mentioned the analysts led by Matt Jamieson. It additionally accounts for 40%-50% of SK Hynix’s dynamic random entry reminiscence (DRAM) chips and 20% of its NAND capability.
“We don’t suppose there could be a significant long-term provide disruption, as it’s probably that Korea will grow to be the principle location for the 2 firms’ expansionary funding and know-how upgrades,” the credit score scores company mentioned within the June 7 report.
The U.S. in October launched sweeping guidelines to chop off China’s entry to acquire or manufacture high-tech semiconductor chips. They got here as considerations grew over China’s skill to make use of such high-tech chips to advance its navy capabilities. The Netherlands and Japan are reportedly poised to comply with go well with.
Samsung Electronics and SK Hynix are the 2 largest producers of reminiscence chips globally, adopted by U.S.-based Micron in third place. Reminiscence chips are storage units used in computer systems, smartphones and tablets.
The businesses’ fabrication vegetation in China make superior chips in addition to older chips, that are exempted from the U.S. restrictions. The reminiscence chips are produced for Chinese language consumption in addition to exports.
Nonetheless, the 2 chip giants obtained one-year waivers from the U.S. to proceed importing superior instruments for his or her China vegetation till October, based on the Korea Instances.
“Ought to the U.S. not lengthen the waiver, we count on the businesses to proceed producing reminiscence chips at their Chinese language vegetation utilizing already put in know-how,” mentioned Fitch Scores.
Profit from Micron ban
In what’s seen as a retaliatory transfer, China banned the sale of merchandise from Micron to be used in essential info infrastructure in Could.
Fitch Scores mentioned Samsung and SK Hynix “might profit from increased chip costs inside China because of this. Nonetheless, the influence is prone to be small and may very well be offset if Micron redirects the sale of its reminiscence chips exterior of China, as this could in all probability decrease world chip costs.”
The White Home reportedly urged South Korea not let its chipmakers fill Micron’s void in China. Round 10% of Micron’s income come from China, based on Micron’s fiscal 2022 report.
The Fitch report mentioned the 2 South Korean chipmakers will not less than partially fill Micron’s hole. “It is going to be troublesome to observe what capability misplaced by Micron is definitely stuffed by the Korean firms, given the commodity-like nature of reminiscence chips.”
“The logistics of this technique might take time, however might offset any constructive influence Samsung Electronics and SK Hynix might acquire from the ban on Micron inside China in gentle of the world’s reminiscence chip oversupply,” the analysts mentioned.
Nonetheless, dangers might additional enhance if the U.S. or China implement extra excessive rulings and bans, as it can have an effect on the associated fee and availability of semiconductor supply-chain elements, they added.